accounting test 2

face value minus allowance for doubtful accounts

estimated value of accounts recievable that will not be collected

reversing write off

account subtracted from another asset account

expense assosciated with uncollectible accounts recievable

estimating the amount of uncollectible accounts expense as a percentage of the revenue earned during the accounting period

estimating the amount of the allowance for doubtful accounts as a percentage of the outstanding receivables balance; longer an account receivable is outstanding, the less likely it is to be paid

classigying each account recievable by the number of days it has been outstanding

a legal document respresenting a credit agreement between a lender and a borrower

borrower; must pay note on due date

person to whom the note is made payable; lender

amount of money loaned

economic benefit earned for loaning the principal

date on which the maker must repay and make final interest payment

assets belonging to the maker that are assigned as security to ensure everything is paid

interest that has been recognized before cash is exchanged

updates the account balances prior to preparing financial statements

revenue is recognized in the period in which it is earned regardless of when the related cash is collected

how quickly assets are expected to be converted to cash during normal operations

each particular piece of inventory has the cost of good sold that that particular inventory costed (VIN #s for cars)

first in, first out; the costof the iems purchased first are asigned to cost of goods sold

last in, first out; cost of the items purchased last be charged to cost of good sold

assigns the average cost of the items available to cost of goods sold

actual physical movement of goods through the business, usually FIFO

if the market price is lower than its purchase price, use which ever is lower

assets that will be converted to cash or consumed within one year or operating cycle

assets used by a business to generate revenue (not sold or invested)

• have a physical presence;
• 1)property, plant, and equipment
• 2) natural resources
• 3) land

• no physical form; rights and privledges
• 1)identifiable useful lives
• 2) indefinite useful lives

(plant assets) includes machinery, equipment, buildings

term used to recognize expense for property, plant, and equipment

term used to recognize expense for natural resources

not suject to depreciation or depletion

patents and copyrights

term used when recgnizing expense for intangible assets with identifiale useful lives

trademarks, franchises

requires that an asset be recorded at the amount paid for it, including and costs necessary to get the asset in the location and condition for its intended use (purchase price, taxes, title costs, installation, removal of old buildings)

acquiring a group of assets in a single transaction; must be allocated among assets required

each asset is assigned a percentage of the total price paid for all assets

the amount of an assets cost that is allocated to expense during an accounting period

expected market value of a fully depreciated asset